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P 300444Z NOV 09
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UNCLAS SECTION 01 OF 06 BEIJING 003186 
 
STATE FOR EAP/CM-HABJAN, EAP/CM, EAP/PD-STOLTZ 
STATE FOR OES DAS MIOTKE, OES/EGC, OES/ENV, AND OES/PCI 
STATE FOR S/SECC-STERN, S/P-GREEN, EEB, AND ECA 
STATE PASS TO CEQ SUTLEY 
USDOE FOR PI/Sandalow 
USDOC FOR MAC AND MAS 
USDOC PASS USPTO FOR WU 
EPA FOR INTERNATIONAL/MKASMAN/GIANNINI-SPOHN 
NSC FOR LOI 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: OVIP PREL PGOV ECON PARM MARR SENV ENRG KGHG CH
 
SUBJECT: BILATERAL WITH VICE PREMIER LI KEQIANG - COOPERATION AND 
CHALLENGES 
 
SUMMARY 
------- 
¶1. (SBU) Commerce Secretary Locke, Energy Secretary Chu, U.S. Trade 
Representative Kirk and U.S. Trade Development Administrator Zak met 
with Vice Premier Li Keqiang on November 18, 2009 at the Great Hall 
of the People, to discuss a broad range of bilateral issues 
including energy cooperation and economic challenges.  The U.S. side 
congratulated China on progress to date on energy efficiency 
improvements and a range of other issues, stressing U.S. willingness 
and desire to continue strengthening cooperation. Vice Premier Li 
lauded the bilateral cooperation and highlighted many areas both 
sides agree must be addressed together such as climate change and 
clean energy.  Li discussed how meeting these challenges is not only 
a matter of international responsibilities but is important  for 
citizens in both countries.  Symbolizing and strengthening the 
bilateral clean energy relationship, Li and other Chinese officials, 
and Locke, Chu, and Zak witnessed and in some cases signed eight 
agreements at the conclusion of the bilateral meetings.  END 
SUMMARY. 
 
¶2. (SBU) Vice Premier Li opened the meeting, noting that he had met 
Secretary Locke and Chu on their previous trips to China, and had 
also met Ambassador Kirk and Director Zak as well. He described the 
gathering as one of old and new friends, welcoming everyone on 
behalf of the Chinese people and government. He commented that the 
frequency of high-level meetings was an indication of the broad 
consensus on global energy and trade issues, a development Vice 
Premier Li found very gratifying. Referring to the meeting between 
Presidents Obama and Hu earlier in the day, during which the two 
leaders reached broad consensus on the importance of the bilateral 
relationship, the Vice Premier characterized the discussion as 
constructive, positive and comprehensive. Vice Premier Li pointed 
out that the Presidents issued a joint statement defining concrete 
actions to further the partnership between our two countries, and 
expressed his hope these actions will help further expand our 
relationship. 
 
U.S. PRAISES PROGRESS, HIGHLIGHTS CHALLENGES 
-------------------------------------------- 
¶3. (SBU) Commerce Secretary Gary Locke thanked Vice Premier Li for 
his hospitality, and explained that the United States and China have 
a long history of cooperation that dates back several hundred years. 
He noted the example of Chinese labor that assisted in completing 
the trans-continental railroad, also noting that rail technology, 
both high-speed and traditional, is an essential part of combating 
global warming. Secretary Locke also mentioned the long history of 
partnership between our two countries, noting collaboration on 
fighting imperialism and nuclear non-proliferation. Secretary Locke 
sited the common challenges that face both countries today, 
including providing health care and combating climate change. He 
suggested that both the United States and China have different areas 
of expertise that could benefit each other in solving these 
 
BEIJING 00003186  002 OF 006 
 
 
problems. Secretary Locke pointed to the signings scheduled to 
follow this meeting (eight signings, mostly focused on energy 
cooperation) as an indication of the cooperation and joint 
commitment to resolve common issues. 
 
¶4. (SBU) Secretary Locke also highlighted the challenge that China 
faces in providing healthcare to its citizens, and mentioned that 
the United States is working to resolve similar issues at home. He 
hoped that China would be open to learning from the mistakes and 
successes of the United States in this area, and said that U.S. 
technology and business practices, including hospital systems, could 
be very helpful in this regard.  Secretary Locke then ceded the 
floor to other members of the President's Cabinet for their 
comments. 
 
¶5. (SBU) Energy Secretary Steven Chu noted that the energy-related 
agreements between the United States and China represented a big 
step forward, and demonstrated a shared commitment to combat 
climate-related problems. Secretary Chu was very encouraged by 
China's new commitment to carbon-intensity targets, and feels this 
represents good news for the world. Secretary Chu pointed out that 
China has already demonstrated an impressive ability to meet 
ambitious targets for reducing the energy used per unit of GDP, and 
hoped the country would be equally committed to reaching 
carbon-intensity targets as well. He cited China's interest in 
renewable energy and increasing political attention to this area as 
positive developments. Speaking to Minister Wan (Ministry of Science 
and Technology), Secretary Chu said that the Clean Energy Research 
Center (CERC) will enable the United States and China to work 
together to co-develop, co-own and deploy new technologies that can 
help solve the world's energy/environment problem. 
 
¶6. (SBU) U.S. Trade Representative Kirk drew attention to an earlier 
conversation between Presidents Obama and Hu about the challenge 
China faces with integrating 600 million rural residents into urban 
areas. Ambassador Kirk said that the financial crisis had 
demonstrated to Presidents Obama and Hu that our two countries' 
economies are intertwined and required rebalancing.  He stated that 
President Obama had made clear that the United States has nothing to 
fear from an expanding China, and that likewise, China should not 
fear as the United States seeks to address its trade imbalance. 
Ambassador Kirk noted that the Chinese are competitive in 
manufacturing, stating that this fits well with U.S. strength in 
innovation, technology and technical expertise. He said it is 
important to maintain openness in this context, allowing each 
partner to benefit from the expertise of the other. 
 
¶7. (SBU) Ambassador Kirk praised the very successful round of JCCT 
talks (Joint Commission for Commerce and Trade), recently concluded 
in Hangzhou, and thanked the commitment of his Chinese counterparts 
for making that a priority. He expressed his hope to continue 
working together to solve remaining issues, including the Government 
 
BEIJING 00003186  003 OF 006 
 
 
Procurement Program. 
 
¶8. (SBU) Trade Development Administration Director Leocadia Zak 
noted that the private sector is an important partner in addressing 
the policy issues that were raised during this meeting, and held up 
the Energy Cooperation Program (ECP) as an important example of 
public-private partnerships to address common concerns. She noted 
the program's early progress, reporting that despite its very recent 
start, the ECP had already recruited 23 corporate members. In 
coordination with the National Development and Reform Commission, 
National Energy Administration and Vice Minister Ma Xiuhong from the 
Ministry of Commerce, the ECP has defined two initial-phase 
activities: a low-carbon leadership program and a technology 
exchange. 
 
LI PRAISES COOPERATION, CALLS FOR MORE 
-------------------------------------- 
¶9. (SBU) Vice Premier Li agreed with Commerce Secretary Locke that 
the cooperation between the United States and China did extend back 
many years, referencing their joint fight against aggression during 
World War II. Today, the process of globalization is generating new 
opportunities for collaboration, particularly in the area of trade. 
Vice Premier Li explained that China responded to the global 
financial crisis by seeking to increase consumer demand and improve 
China's health care system. He mentioned that efforts were already 
underway to boost domestic consumption and build a social safety 
net, explaining that the challenge was to transform economic 
development and generate balanced growth. 
 
¶10. (SBU) Countries must stand against trade and investment 
restrictions, said the Vice Premier, noting that China is Asia's 
largest market for foreign imports. He welcomed inflows of 
competitive U.S. products, especially in the area of advanced 
technology, which he noted also included medical products. The Vice 
Premier further agreed that climate change and clean energy were 
important areas of collaboration, and pointed to the three 
government-to-government signings immediately following this meeting 
as evidence of the broad scope for cooperation. He explained that 
solving the energy and environment problems were not just part of 
China's international responsibilities as a large country, but also 
essential for its internal commitments to its people as well. 
 
¶11. (SBU) Vice Premier Li noted that given its large population and 
rapid growth, sustainable development is a necessary policy goal for 
China, and he singled out energy as the most important bottle neck. 
He noted that China has the largest energy generation capacity in 
the world and the largest new capacity under construction in the 
world. Vice Premier Li highlighted the importance of energy 
efficiency in ensuring sustainable growth, and noted that China is 
deploying U.S. technology, including Westinghouse's AP1000, in this 
effort. He expressed a desire for more forward looking research 
projects in the area of renewable energy technologies, including 
 
BEIJING 00003186  004 OF 006 
 
 
fuel-cell electric cars, and CO2 capture/sequestration procedures. 
 
¶12. (SBU) Vice Premier Li said that the foundation of cooperation on 
energy and trade issues involved working closely with "enterprises" 
(companies), and said that the inherent vitality of Chinese 
enterprises will be unleashed in this effort. He thought that 
cooperation between the private sector in the United States and 
China would be important, and described the role of government as 
facilitating an enabling environment for cooperation between private 
sector players. 
 
¶13. (SBU) Vice Premier Li noted that the context created by the 
international financial crisis and world recovery underscored a need 
for sustained and balanced growth. This round of meetings was 
helpful in creating a better mutual understanding, and an important 
opportunity to clear up differences. The actions outlined in the 
signings provided follow through on the commitments made by 
Presidents Obama and Hu. 
 
¶14. (SBU) Secretary Locke expressed appreciation for the opportunity 
to work together with his Chinese counterparts, exchanging 
technology and expertise, to solve common problems. He explained 
that it was our moral responsibility to address environmental 
issues, and hoped that 100 years from now the history books would 
say the United States and China worked together to solve climate 
change. 
 
¶15. (SBU) Vice Premier Li concluded by saying that the United States 
and China are the world's largest developed and developing country 
respectively, and have a shared interest in addressing this issue. 
He explained that globalization provides a new opening to work 
together, but hoped the history books would comment how all 
countries in the world had worked together to solve the 
environmental problem. 
 
SIGNINGS 
-------- 
¶16. (U) Presided over by Vice Premier Li, and witnessed or signed by 
Secretary Locke, Secretary Chu, Director Zak, and DOE Assistant 
Secretary David Sandalow, eight signings occurred at the conclusion 
of the bilateral meeting. 
 
(U) Secretary Locke, Secretary Chu, and Director Zak  signed an MOU 
on the U.S.-China Energy Cooperation Program, which establishes the 
operating framework of this public-private partnership that TDA and 
MOFCOM agreed to establish during the JCCT to develop clean energy 
projects in China, and which now includes 23 founding U.S. 
companies. 
 
(U) Assistant Secretary Sandalow signed, with Vice Administrator of 
NEA Liu Qi, a Memorandum of Cooperation establishing a Renewable 
Energy Partnership. 
 
BEIJING 00003186  005 OF 006 
 
 
 
(U) Ambassador Jon Huntsman (in absentia, but signed previously) 
signed with Liu Qi an agreement pledging cooperation on shale gas 
development.  This document is an Annex to the MOU to Enhance 
Cooperation on Climate Change, Energy, and the Environment signed 
during the SNED in July. 
 
(U) Director Zak signed an MOU on Support of an Integrated Gas 
Combined Cycle (IGCC) Feasibility Study with CEPCC (a Chinese power 
engineering firm).  Each plant is estimated to be worth over $100 
million in U.S. exports. 
 
(U) GE Energy and Shenhua Group signed an MOU on Cleaner Coal 
cooperation that will establish a framework for the formation of a 
joint venture company between GE Energy and Shenhua Group to advance 
"cleaner coal" technology solutions. 
 
(U) Peabody and Huaneng Group signed a contract finalizing 
investment obligations in the GreenGen IGCC-CCS plant that will 
sequester major volumes of carbon dioxide beginning in about five 
years. 
 
(U) AES Corp. and a Chongqing-based energy company signed a Joint 
Venture contract to commercially utilize coalbed methane from mines 
in Sichuan, abating some 4 million tons of CO2-equivalent emissions 
annually. 
 
(U) First Solar Corp. and the Ordos (Inner Mongolia) city Mayor 
signed a Cooperation Framework Agreement governing First Solar's 
investments, and Ordos' obligations to facilitate, what may become 
the world's largest solar power farm near Ordos. 
 
(U) Vice Premier Li and the U.S. VIPs also recognized the recent 
signing of the Tsinghua University-Massachusetts Institute of 
Technology-Cambridge University Low Carbon Energy Alliance as a 
major contribution by academia to the acceleration of clean energy 
technology development and deployment and a lower-carbon world. 
 
¶17. (U) The U.S. delegation consisted of: 
Gary Locke, Secretary of Commerce 
Steven Chu, Secretary of Energy 
Ambassador Ron Kirk, U.S. Trade Representative 
Leocadia Zak, Director, Trade Development Administration 
Ambassador Demetrios Marantis, Deputy U.S. Trade Representative 
David Sandalow, Assistant Secretary, Department of Energy 
Ellen Moran, Chief of Staff, Department of Commerce 
Rod O'Connor, Chief of Staff, Department of Energy 
Julianna Smoot, Chief of Staff, U.S. Trade Representative 
William Zarit, Commercial Minister-Counselor, U.S. Embassy Beijing 
Marty Schoenbauer, Energy Attach, U.S. Embassy Beijing 
Landon Loomis, Second Secretary, U.S. Embassy Beijing 
 
 
BEIJING 00003186  006 OF 006 
 
 
¶18. (U) The Chinese delegation consisted of: 
Li Keqiang, Vice Premier of the State Council 
Wan Gang, Minister of Science and Technology 
Ning Jizhe, Vice Minister of Research Office of the State Council 
Zhang Xiaoqiang, Vice Chairman National Development & Reform 
Commission 
He Yafei, Vice Minister of Ministry of Foreign Affairs 
Ma Xiuhong, Vice Minister of Commerce 
Liu Qi, Deputy Head of National Energy Administration 
 
HUNTSMAN